MakeMyTrip pares Q4 loss to $44.1-million, wary of headwinds

Company executives also cited increasing prices of aviation fuel globally and the strengthening dollar against the rupee that could push up ticket prices.

NEW DELHI: MakeMyTrip reported much-improved quarterly results, as the Nasdaq-listed company’s numbers were boosted by a combination of strong growth across its two primary businesses, but warned of increasing competition and global macro headwinds going forward through the rest of fiscal 2019.

For the quarter ended March 31, the company, which had a market cap of $3.20 billion as of Wednesday, reported loss of $44.1 million, or 42 cents a share, down from $73.1 million, or 93 cents a share on a diluted basis.

Personnel expenses for the fourth quarter also decreased by more than 13% to $28.4 million. Marketing and sales promotion expenses increased by19% to $93.9 million for the quarter, up from $78.8 million in the same period last year, as the company continued to spend to gain market share in a highly-fractured landscape.
Revenue for the three-month period increased by more than 31% to $157.8 million, compared to the year-ago period, as the company continued to see double-digit growth across its air ticketing and hotels and packages segments.

Q4 2018 revenue from the airticketing business increased by almost 38% to $45.3 million, compared to a year ago, while sales from its hotels and packages business increased by more than 18% to $93.4 million over the same period.

Additionally, revenue from MakeMyTrip-owned online bus ticketing platform, redBus, came in at $12 million in the fourth-quarter, coming from 11 million travelled bus tickets, with gross bookings of $135.6 million.

However,during its earnings call with analysts, company executives also warned of macroeconomic factors, particularly in the air travel segment, citing increasing prices of aviation fuel globally, and the strengthening dollar against the rupee that is anticipated to push up ticket prices.

The company also anticipates more heated competition across both its primary business units.

“On the air market side, Paytm has definitely been very competitive on the air ticketing, along with Yatra and ClearTrip also being fairly active… Low-cost and full service carriers have also been looking to build their direct (sales) programmes,” Deep Kalra, group chief executive of MakeMyTrip, pointed out.

“On the hotels segment, we are seeing Booking, Expedia and Agoda on the premium segment …On the budget hotels side, Treebo and Fab have direct business (channels) as well.. There is a fairly active market on the competitive side, both, from international and domestic players,” he said.

The company also spoke in detail about its recent partnership with SoftBank-backed OYO, a tie-up that saw MakeMyTrip delist all the properties of budget-focused online hotel companies, SAIF Partners-backed Treebo Hotels and Accel India-backed FabHotels, both of which compete with OYO, from its two primary platforms.

“Clearly their (OYO’s) vision is to become a hotel chain, and they have shifted from their strategy of being an aggregator, to an inventory-run hospitality management company. That was one of the fundamental reasons why we entered into this partnership,” Rajesh Magow, chef executive of MakeMyTrip India, said.

MakeMyTrip’s decision to bet on OYO Rooms is the latest in a series of moves aimed at cementing its partnership with the SoftBank-backed company.

According to sources, the two parties could also explore a potential equity deal in the future which may involve other options, including MakeMyTrip taking a stake in Oyo Rooms.

Shares of MakeMyTrip were trading down almost 4% at $33.60 on Wednesday in early morning trade on Nasdaq.

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